Mealey's Securities

  • July 10, 2020

    Supreme Court Agrees To Hear FHFA Separation Of Powers Consolidated Appeals

    WASHINGTON, D.C. — The U.S. Supreme Court on July 9 agreed to hear two appeals in an investor lawsuit that seek determination as to whether the structure of the Federal Housing Finance Agency (FHFA) violates the separation of powers and whether federal courts are required to set aside actions set forth by the FHFA under its current single-director structure (Patrick J. Collins, et al. v. Steven T. Mnuchin, et al., No. 19-422, and Steven T. Mnuchin, et al. v. Patrick J. Collins, et al., No. 19-563, U.S. Sup.).

  • July 10, 2020

    Claims In Online Retailer Stock-Drop Suit Dismissed For Failure To State Claim

    BOSTON — A lead plaintiff in a securities class action lawsuit against online retailer Wayfair Inc. and three of its senior executives failed to sufficiently plead any of the necessary elements of his federal securities law claims in alleging that the defendants misrepresented the company’s advertising revenue leverage, a federal judge in Massachusetts ruled July 8 in granting the defendants’ motion to dismiss (In re Wayfair Inc. Securities Litigation, No. 19-10062, D. Mass., 2020 U.S. Dist. LEXIS 119286).

  • July 09, 2020

    Shareholder Appeal In Ponzi Scheme Lawsuit Dismissed On Jurisdictional Grounds

    NEW ORLEANS — Referencing a recent ruling within the circuit, a Fifth Circuit U.S. Court of Appeals panel on July 7 dismissed an appeal filed by shareholders in a securities class action lawsuit against parties the shareholders alleged operated a Ponzi scheme, ruling that the appellate court lacked the necessary jurisdiction to hear the appeal (Firefighters’ Retirement System, et al. v. Citco Group Limited, et al., No. 19-30165, 5th Cir., 2020 U.S. App. LEXIS 21130).

  • July 08, 2020

    Investor: Private Prison Company Hid Inadequate COVID-19 Response Measures

    WEST PALM BEACH, Fla. — The operator of prisons and halfway houses and two of its senior executive officers violated federal securities law by misrepresenting the company’s response procedures to the novel coronavirus pandemic at its facilities, which caused significant health risks to the residents of the facilities, a shareholder alleges in a July 7 securities class action filed in Florida federal court (Steve Hartel v. The Geo Group Inc., et al., No. 20-81063, S.D. Fla.).

  • July 07, 2020

    Drug Maker To Pay Over $21M To Settle Foreign Corruption Practices Violations

    WASHINGTON, D.C. — A pharmaceutical company will pay more than $21 million to settle claims brought by the Securities and Exchange Commission that allege that the defendant violated provisions of the Foreign Corrupt Practices Act of 1977 (FCPA) when its Russian and Turkish subsidiaries engaged in schemes to pay government officials in those countries for favorable treatment for the company’s primary drug, Soliris, according to a cease-and-desist order filed by the SEC on July 2 (In the Matter of Alexion Pharmaceuticals Inc., No. 3-19852, SEC).

  • July 07, 2020

    D.C. Circuit Rules That SEC Lacked Authority To Implement Fees Pilot Program

    WASHINGTON, D.C. — A District of Columbia Circuit U.S. Court of Appeals panel on June 16 ruled that the Securities and Exchange Commission lacked the necessary authority from Congress when it adopted a pilot program to gather data that may be used in taking future regulatory action on the fees charged by national securities exchanges (New York Stock Exchange LLC, et al. v. Securities and Exchange Commission, No. 19-1042, D.C. Cir., 2020 U.S. App. LEXIS 18860).

  • July 06, 2020

    Diagnostics Company Again Named In Securities Suit Over Antibody Test Results

    NEW YORK — A point-of-care diagnostics company and certain of its senior executives were hit with a second securities class action on July 3 in New York federal court, alleging that the defendants misrepresented the accuracy of the company’s antibody test used to determine current or past exposure to COVID-19 in violation of federal securities law (Anthony Bailey v. Chembio Diagnostics Inc., et al., No. 20-2961, E.D. N.Y.).

  • July 02, 2020

    Split Delaware High Court Overturns Dismissal In Breach Of Fiduciary Duty Suit

    WILMINGTON, Del. — A Delaware Chancery Court vice chancellor erred in dismissing a breach of fiduciary duty claim against the former CEO of a professional services firm after he failed to disclose to his company’s board of directors that he had been offered a lucrative compensation package in exchange for obtaining shareholder approval of a proposed merger deal because the trial court ignored certain shareholder disclosure cases in deciding whether the CEO’s alleged omissions were material to the board, a divided Delaware Supreme Court ruled June 30 (City of Fort Myers General Employees’ Pension Fund, et al. v. John J. Haley, et al., No. 368, 2019, Del. Sup., 2020 Del. LEXIS 225).

  • July 01, 2020

    Split 2nd Circuit Panel Rules That SEC Regulation Is Not Arbitrary, Capricious

    NEW YORK — A divided Second Circuit U.S. Court of Appeals panel on June 26 ruled that although a member of an investment-adviser group has Article III standing to challenge the Securities and Exchange Commission’s adoption of a regulation of certain obligations for broker-dealers, the case is not the same for a group of states and the District of Columbia because their assertions that the regulation will cause a decline in state tax revenues in “entirely speculative” (XY Planning Network LLC, et al. v. United States Securities and Exchange Commission, et al., Nos. 19-2886 and 19-2893. 2nd Cir., 2020 U.S. App. LEXIS 20078).

  • June 29, 2020

    Digital Currency Seller Ordered To Return $1.2B To Investors To Settle SEC Suit

    NEW YORK — A federal judge in New York on June 26 issued a final judgement ordering two offshore entities to return over $1.2 billion in investments to investors in digital tokens and pay an $18.5 million civil penalty to settle claims that the defendants violated federal securities laws by engaging in an offering of the digital-asset tokens in violation of the registration provisions of the securities laws (Securities and Exchange Commission v. Telegram Group Inc., et al., No. 19-9439, S.D. N.Y.).

  • June 29, 2020

    Novartis, Former Subsidiary To Pay $345M In 3 Foreign Bribery, Securities Cases

    Novartis AG and a former subsidiary on June 25 agreed to pay $345 million in criminal penalties and disgorgement to resolve criminal and administrative charges that they violated the Foreign Corrupt Practices Act (FCPA) and the Securities and Exchange Act of 1934, 15 U.S. Code § 78m, by paying bribes to health care employees in Greece and Vietnam to buy the companies’ drugs and failing to report those transactions (United States v. Novartis Hellas S.A.C.I., No. 20-538, United States v. Alcon Pte. Ltd., No. 20-539, D. N.J., In the Matter of Novartis AG, Admin. Proc. 3-29835, SEC).

  • June 29, 2020

    Diagnostics Company Named In Antibodies Test Accuracy Stock-Drop Suit

    NEW YORK — A point-of-care diagnostics company and two of its senior executives misrepresented the accuracy of its antibody test used to determine current or past exposure to COVID-19 in violation of federal securities laws, causing the company’s stock to trade at an artificially high rated until the alleged fraud was disclosed, an investor argues in a June 18 complaint filed in New York federal court (Sergey Chernysh v. Chembio Diagnostics Inc., et al., No. 20-2706, E.D. N.Y.).

  • June 26, 2020

    Exchange Act Claims Dismissed For Lack Of Actionable Misstatement, Scienter

    NEW YORK — A federal judge in New York on June 24 ruled that the lead plaintiff in a securities class action against an information and analytics company and two of its executive officers failed to plead any actionable misstatements or omissions or scienter in alleging that the defendants failed to disclose internal disagreements between senior executives and directors over the growth and long-term strategy of the company in violation of federal securities laws (Sergii Bratusov v. Comscore Inc., et al., No. 19-3210, S.D. N.Y., 2020 U.S. Dist. LEXIS 110695).

  • June 26, 2020

    Judge Decides 6 Motions To Dismiss In Insurer’s $135M Fraud Scheme Case

    NEW YORK — Addressing six motions to dismiss, a New York federal judge granted and denied in part the motions on June 22 in an insurer’s suit alleging that defendants “engaged in a complex and massive fraud against it, resulting in losses exceeding $135 million” (Great Western Insurance Co. v. Mark Graham, et al., No. 18-6249, S.D. N.Y., 2020 U.S. Dist. LEXIS 109330).

  • June 24, 2020

    Investors’ Securities Law Claims Over Merger Deal Proxy Dismissed

    NEW YORK — A federal judge in New York on June 23 ruled that lead plaintiffs in a securities class action lawsuit stemming from alleged misrepresentations made in the proxy materials for a merger deal between two biopharmaceutical companies that develop cancer treatment drugs have failed to plead any material misrepresentations or omissions or loss causation in making their federal securities law claims (In re GTx Shareholders Litigation, No. 19-3239, S.D. N.Y., 2020 U.S. Dist. LEXIS 109680).

  • June 24, 2020

    Post-Tender Offer Statements Not Actionable Under Section 14(e), Panel Rules

    CHICAGO — An investor may not sue a company under Section 14(e) of the Securities Exchange Act of 1934, challenging statements it made after a tender offer for the repurchase of its stock has been made, because the statute does not give a private right of action to collect damages in that instance, a Seven Circuit U.S. Court of Appeals panel ruled June 22 (Walleye Trading LLC v. AbbVie Inc., et al., No. 19-3063, 7th Cir., 2020 U.S. App. LEXIS 19361).

  • June 23, 2020

    COVID-19 Test Kit Maker Named In Investor Suit Over Kit Accuracy Statements

    SALT LAKE CITY — An investor sued a COVID-19 test kit maker and several of its executive officers and directors in Utah federal court on June 15, alleging that the defendants issued a series of misrepresentations regarding the accuracy of the company’s test kits in violation of federal securities laws (Gelt Trading Ltd. v. Co-Diagnostics Inc., et al., No. 20-368, D. Utah).

  • June 22, 2020

    Certain Investor Claims In Securities Class Action Over Merger Deal Remanded

    PHILADELPHIA — A Third Circuit U.S. Court of Appeals panel on June 18 ruled that a federal district court partially erred in determining that shareholders in a securities class action stemming from a merger deal between two banks failed to plead any actionable misstatements or omissions in making their federal securities law claims (David Jaroslawicz v. M&T Bank Corp., et al., No. 17-3695, 3rd Cir.).

  • June 22, 2020

    U.S. Supreme Court Places Limits On SEC Disgorgement Awards

    WASHINGTON, D.C. — The Securities and Exchange Commission may seek disgorgement as an equitable form of relief under federal statute in situations where seeking such an award will not exceed the net profits obtained by a wrongdoer and is awarded for victims, the U.S. Supreme Court ruled June 22 in an 8-1 decision (Charles C. Liu, et al. v. Securities and Exchange Commission, No. 18-1501, U.S. Sup., 2020 U.S. LEXIS 3374).

  • June 17, 2020

    Government Seeks Reinstatement Of Securities Fraud Convictions Against Former Execs

    NEW YORK — The U.S. government in a June 16 reply brief asks the Second Circuit U.S. Court of Appeals to reinstate jury verdicts against two former hedge executives and to proceed to sentencing over allegations of securities fraud in a scheme to transfer the hedge fund’s assets to a reinsurance company and related entities to defraud bondholders in an oil and gas company (United States v. Uri Landesman, et al., No. 19-3207 c/w 19-3209, 2nd Cir.).